Release: 4713-02
For Release: October 16, 2002


Consent Order Finds that John F. O’Herron and O’Herron Asset Management, Inc. Fraudulently Diverted Approximately $1.4 Million of Investor Funds for Their Own Use

WASHINGTON, D.C. -- The U.S. Commodity Futures Trading Commission (CFTC) announced today that U.S. Magistrate Judge Joseph G. Scoville of the U.S. District Court for the Western District of Michigan entered a consent order of permanent injunction, settling an enforcement action filed by the CFTC against defendants John F. O’Herron, of Manistee, Michigan, and O’Herron Asset Management, Inc. (OAM), a Michigan corporation (see CFTC News Release 4482-00, December 12, 2002).

The court order, which was entered on October 9, 2002, and finds that O’Herron and OAM fraudulently operated a commodity pool and diverted approximately $1.4 million of investor funds for personal uses, permanently enjoins them from further violations of federal commodities laws and, among other sanctions, permanently bars them from futures trading.

Specifically, the order finds that, from January 1998 to June 2000, O’Herron and OAM received approximately $2.7 million in investor funds for the purpose of pooling the funds to trade in commodity futures contracts. However, O’Herron only invested one-third of the funds provided to him, according to the order, and improperly diverted substantial investor funds to his personal use and benefit. In addition, according to the order, O’Herron issued statements to investors showing exaggerated and fraudulent investment earnings. For example, these investment statements indicated that as of April 31, 2000, collectively, investors had over $2.8 million in trading accounts with O’Herron. In actuality, less than $4,636 existed in the trading accounts at that time, according to the order.

Defendants Permanently Barred From Futures Trading

Specifically, the court order finds that O’Herron and OAM violated the anti-fraud provisions of the Commodity Exchange Act. The order also:

The United States Attorney for the Western District of Michigan has filed a related criminal case against O’Herron arising from many of the same facts. On July 8, 2002, O’Herron pled guilty to felony mail fraud charges arising out of that case. O’Herron’s sentencing in the criminal matter is scheduled for October 18, 2002.

The following CFTC Division of Enforcement staff are responsible for this case: Scott R. Williamson, Robert J. Greenwald, Mark Bretscher, Donald Nash, and Mary Beth Spear.

Media Enforcement Contact:
Rosemary Hollinger, Regional Counsel
Central Regional Office, CFTC Division of Enforcement
(312) 596-0538

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